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Detroit's Urban Renewal

By Kathy FettkeJanuary 14, 2019

Detroit is showing the world how a city can pull itself up by its bootstraps, and become a showcase for urban renewal. It’s a city that’s rising from the ashes of urban decay with an already renovated city core, and millions of dollars flowing in for neighborhood improvements from corporate donors. (1)

Record Corporate Donation for City Upgrades

Detroit recently announced the largest corporate donation in the city’s history for this project. Seven major companies with a presence in Detroit donated $5 million each. The money will go into the Strategic Neighborhood Fund that’s being used to pay for physical upgrades to distressed neighborhoods. Of course, this helps not just the city and the residents who live there, but the entire business environment, including the rental market and real estate investors.

There’s a five-point plan for neighborhood improvements. (2)

1 – To refurbish existing parks and create a new one with amenities that fit community needs.
2 – To fill vacant storefronts with mixed-use and multi-family projects in commercial corridors.
3 – To make streets more attractive and walkable with pedestrian lighting, safer street crossings, repaved sidewalks, and bike-share lanes.
4 – To stabilize neighborhoods by renovating and preserving vacant single family homes, and the removal of blighted homes.
5 – To increase the supply of affordable housing units, and prevent displacement in areas of development.

Money to Benefit 10 Neighborhoods

The latest $35 million is part of a second round of funding that began with a $15 million contribution from the Kresge Foundation. The seven new donors include American Axle, Blue Cross Blue Shield of Michigan, Chemical Bank, Fifth Third Bank, Flagstar Bank, Huntington Bank, and the Penske Corporation. The city’s goal is to raise $130 million to rebuild 10 neighborhoods. It hopes to meet that goal by the end of this year. The first round of funding raised $42 million for improvements to three neighborhoods.

Mayor Mike Duggan says of this massive urban renewal effort, “Today we are seeing a major shift within the corporate community toward investment to our neighborhoods, and residents can expect real, physical changes coming in the next few years.” He says, “We are taking the strategy that worked in Midtown and scaling it citywide to bring more development to neighborhoods.”

20-Minute Neighborhoods

One of the city’s goals is to create “20-minute neighborhoods.” Those are areas where it takes just 20 minutes to walk to a central district with stores, parks, schools, and public transit. It’s also working to boost the growth of small businesses and to create more affordable housing.

The affordable housing plan includes a fundraising goal of $250 million. The money will be used to preserve 10,000 affordable housing units and create another 2,000. The mayor says, “We are not going to grow as a city unless we do everything in our power to keep the residents we have and attract new residents.”

Detroit’s Housing Market

Individual investors have also discovered Detroit’s housing market. Detroit’s single-family rental market is one of the best in the nation. You can buy extremely affordable homes that provide cash flow and appreciation. The median home price is about $80,000, but you can buy fully renovated properties for as little as $65,000 and rent them for 1.18% of the purchase price. That’s a monthly rent of $767 for a $65,000 home. Detroit offers the potential for more monthly rental income than most other U.S. cities.

Quicken Loans founder Dan Gilbert is also optimistic about Detroit’s rebirth. He’s one of two billionaires who are committed to the rebuilding of Detroit and is pouring money into various redevelopment projects. Crain’s reported recently that Gilbert isn’t worried about a recession. (3) He says even if one hits us within the next two years, his building projects will continue. He’s launching them by self-funding, and then refinancing them at a later date. He says he’s had no trouble refinancing the projects once they are done, and by self-financing during construction, he’s able to simplify the process of construction, and have more flexibility.

According to Crain’s, we can expect his construction spree to continue. Gilbert says, “We are working on some really exciting, unique things which I can’t talk about yet. It’s really exciting. It’s all connected — there might be some office and residential — but there’s another theme, and I hope it comes to fruition.”

ABOUT KATHY FETTKE

Kathy Fettke is the Co-Founder and Co-CEO of Real Wealth Network. She is passionate about researching and then sharing the most important information about real estate, market cycles and the economy. Author of the #1 best-seller, Retire Rich with Rentals, Kathy is a frequent guest expert on such media as CNN, CNBC, Fox News, NPR and CBS MarketWatch.

Opinion: San Francisco a model for Detroit

By Mark S. LeeThe Detroit NewsJune 10, 2018

I saw Detroit’s potential future in the tech industry based on what I encountered in San Francisco. While visiting my son there recently, I envisioned Detroit as an emerging technology and mobility hub attracting talent from across this region and country.

I have been visiting San Francisco for over 30 years and to see “The City’s” (its local nickname) transformation has been significant.

I have also been tracking the trials, tribulations and successes of Brian Clark, a native Detroiter and University of Michigan alumnus, who moved there five years ago to pursue his entrepreneurial journey in Silicon Valley.

To Motor City residents, San Francisco was been long known for its Golden Gate Bridge, trolley cars, steep hills, the idyllic ocean side views and the backdrop for many TV shows and movies. But now, as part of Silicon Valley, it’s known as a technology hub that’s become a magnet for young people, engineers, entrepreneurs and innovators.

Upon my arrival, I walked around downtown and felt the energy and thought of Detroit’s burgeoning downtown with its enhanced and renewed vibrancy. I also thought about our city’s potential and ever-expanding presence in the tech space.

My son, who relocated to San Francisco with his wife from Chicago, explained to me why so many young people are migrating from primarily the East Coast and parts of the Midwest. He also reminded me that the financial resources and tech companies flowing into San Francisco were key reasons for attracting young people with diverse backgrounds.

And as I walked around downtown, it felt like I was surrounded by a number of recent college graduates working in the shadows of San Francisco’s historic downtown buildings. I also saw technology-based companies sprinkled throughout its core.

This influx of people has driven housing prices while increasing the region’s overall cost of living to significant levels.

For example, I talked extensively to an engineer-turned-entrepreneur regarding his housing situation. He currently shares a two-bedroom, 900-square foot apartment for $5,600 per month with three other business owners. He simply stated he has no desire to move and is willing to stay because he’s an engineer and believes having accessibility to these types of opportunities are essential for business longevity.

These costs, however, are driving some to live across the Bay in neighboring Oakland and other surrounding areas.

Regardless, I was amazed by its energy, continued growth and thought about how San Francisco can be an example for Detroit.

There’s been much talk about our city becoming more economically diverse. While going down this path, Detroit continues to grapple with its historical political, racial and regional divide. While progress has been made, Detroit’s future, with manufacturing its core legacy, is tied to economic diversity, technology/mobility sectors and a strong entrepreneurial ecosystem.

San Francisco’s expansion into the technology sector has become an integral part of its local economy.

As a Detroit native, I have seen the cyclical nature of the automotive industry. And challenges still confront our fragile neighborhoods. But as I see and hear stories about Woodward Avenue’s continuing reemergence, enhanced talk about Corktown potentially becoming a tech-based hub and the automotive industry continuing to align itself in the mobility space, I thought about it in the context of San Francisco.

Report: Detroit lands in top 20 of the hottest real estate markets in the U.S.

By Robin RunyanJanuary 25, 2018

Trying to figure out the Detroit real estate market isn’t the easiest task, but we do know that good properties don’t last long on the market here. We also know that people love to look at Detroit real estate. Perhaps that’s what makes the Motor City one of the hottest markets in the country.

Realtor.com released their list of the “hottest” markets in the country for January 2018, according to how long houses stay on the market and by listing views in mid to large markets. 13 of the top 20 metro areas are in California (perhaps many are curious as to the astronomically high prices in the San Francisco/San Jose areas). Detroit and Columbus, Ohio were the only midwestern cities to crack the top 20.

This is the second month in a row for Detroit-Warren-Dearborn at the #19 spot. The median age of inventory—or how long the homes last on the market—came in at 68 days for Detroit.

As we’ve noted in the past, the Detroit housing stock varies greatly across neighborhoods. We keep searching for those elusive, fairly affordable move-in ready homes amid the high-priced condos in downtown and Midtown and complete fixer-uppers or foreclosures in many other parts of the city. It seems like many more people are doing the same.